Here Comes the (Internet) Tax Man

Dear Customer: 

If you enjoy shopping on line and not having sales tax added to your purchase, trouble is on the horizon. 

Congress is considering a new law that will require online sales to be taxed at the rate in the buyers home state, even though the online seller is not located in that state. 

On passage, if it comes, the so-called Market Fairness Act, will require an online merchant - such as Native-American-Jewelry.org - located in Florida, to collect the Illinois sales tax from a buyer in Chicago. (what is it now? 10%?) In fact, if different counties and cities in Illinois have different sales tax rates, we will have to figure the sales tax for each town and county. This will be true for every district in every state with a sales tax. These tax rates will have to be added to your purchase price, in addition to the cost of shipping.

To be fair, some merchants complain that online merchants have an unfair advantage because they don't have to collect the tax that the local merchant does. 

Actually, the taxing authority requires the buyer to report the sale value and pay the tax directly to the authority. So, online purchases have not been tax-free. The online merchant just has not been required to incur the expese to collect the tax for a state in which it does not have a facility, or a vote and does not use the local infrastructure and services. (We used to call it "taxation without representation").

"Why are there online merchants, anyway", you might ask. 

1. Online merchants offer product inventory and selection that buyers can't find locally.

2. Online merchants tend to have lower prices, which benefit buyers.

3. Online merchants are available for buyers to easily compare prices.

4. Online merchants save buyers time, trouble and transport costs of shopping locally.

We have nothing against shopping locally. We do it ourselves.

But the advantages above will be diminished under the new law. And you, as a consumer will be the loser.

Why are some forces pushing for this law?

A. Governments need money and they are looking for ways to get it. Since they feel they can't trust you to pay the tax directly, they are conspiring to force someone else to do the dirty work, with no compensation to the online merchant for their efforts.

B. Large online merchants have facilities in states other than their headquarters. They must collect taxes there anyway.  To them this eliminates a benefit a small, specialized online merchant has, and squeezes a small business out. Ultimately, to the inconvenience of the public.

So, what can you do about it? Two things.

1. Let your Congressperson and Senator know you oppose the mis-named Market Fairness Act. 

2. Do your online shopping now, before the law can be passed and applied.

You'll save, and support small business in America. Thank you.